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DTCC selects IBM, Axoni and R3 to develop blockchain solution for derivatives

First Published 9th January 2017

Firms to collaborate on leveraging distributed ledger technology to build Trade Information Warehouse.

David Rutter, R3

David Rutter, R3

The Depository Trust & Clearing Corporation has selected IBM, in partnership with Axoni and R3, to provide a distributed ledger technology framework to drive improvements in derivatives post-trade lifecycle events.

The firms will work collaboratively to re-platform DTCC's Trade Information Warehouse (TIW), building a derivatives distributed ledger solution for post-trade processing. The TIW service currently automates the record keeping, lifecycle events, and payment management for more than $11 trillion of cleared and bilateral credit derivatives.

The solution aims to streamline derivatives processing by eliminating the need for disjointed, redundant processing capabilities and the associated reconciliation costs. The solution has been developed with input and guidance from market participants including Barclays, Citi, Credit Suisse, Deutsche Bank, J.P. Morgan, UBS and Wells Fargo, and key market infrastructure providers, IHS Markit and Intercontinental Exchange.

Under the agreement, IBM will lead the initiative, provide program management, DLT expertise, and integration services, and offer the solution-as-a-service. Axoni will provide distributed ledger infrastructure and smart contract applications, with R3 acting as a solution advisor.

Development is expected to begin in January 2017 and build on Axoni's AxCore distributed ledger protocol which will be submitted to Hyperledger when the solution goes live, anticipated in early 2018. Hyperledger is an open source collaboration project hosted by the Linux Foundation.

David Rutter, CEO of R3, stated, "We're very excited to be working with this team, as DTCC seeks to enhance its derivatives processing technology. Distributed ledger technology is a natural fit for derivatives processing. By recording and automatically managing shared records of financial agreements in the cloud without error, it can minimize the steps required for post-trade processing and free up middle and back office staff from the onerous task of reconciliation."